3 more banking licences to be granted on political ground: Muhith

02 Nov,2018


Finance minister A M A Muhith on Thursday said that new banking licences were granted to entrepreneurs on ‘political grounds’ in the sector already overcrowded with about 57 banks, of which many are hit hard by scams.

He made the comment while answering a question on Bangladesh Bank’s recent move to award three licences to new banking entrepreneurs including 85-year old Jahanara Huq.
Muhith was talking to reporters after a meeting with the Economic Reporters’ Forum at his secretariat office.
Jahanara Huq, mother of Law Minister Anisul Huq, is the chairman of Citizen Bank, one of the three proposed banks. 
Other two proposed banks are Bengal Bank and People’s Bank, according to Bangladesh Bank spokesman Serajul Islam.
Muhith noted that Citizen Bank was proposed by Ariful Huq Rony, younger brother of Law Minister Anisul Huq.
But Ariful Huq died in March 2017, he said.
Of the private scheduled banks, the present government provided licence to establish nine banks in 2009 on political consideration despite opposition by the central bank and other quarters.
One of the new banks — Farmers Bank founded by former home minister Muhiuddin Khan Alamgir — has been facing severe liquidity crisis because of loan scams.
The government was forced to arrange bailout fund worth more than Tk 700 crore from the state-owned commercial banks for scam-hit Farmers Bank.
Commenting on the disastrous outcome of providing licence to a minister he said it was true that the government digested a lot of criticism because of scams in the Farmers Bank.
Earlier, Muhith stated that he was very unhappy with the development of awarding banking licences to new entrepreneurs.
He noted that there was no necessity of awarding more banking licences providing the fact that ‘merger of banks would start soon.’
He stressed the need of amending the bankruptcy act to pave the way for the much-talked-about mergers.
On Monday, BB awarded licence to Community Bank Bangladesh of Bangladesh Police and reviewed proposals of Citizen Bank, Bengal Bank and People’s Bank.
Bengal Bank is proposed by Bengal Group of Industries and People’s Bank by M A Quasem, an Awami League leader in the US.
The BB was under pressure to award banking licenses despite a position paper of it on the establishment of new banks drafted in December 2017 said the entry of new banks would not be helpful for keeping discipline in the already undisciplined banking sector.
The central bank officials pointed out that two of the nine new banks established after 2013 — Farmers Bank and NRB Commercial Bank — were at risk because of scams.
Besides, other new banks — Meghna Bank, Midland Bank, Modhumoti Bank, NRB Bank, NRB Global Bank, South Bangla Agriculture and Commerce Bank and Union Bank — could not comply with the licensing conditions like placing initial public offering and maintaining certain ratio of agricultural loan disbursement, said the position paper.

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